Left Wants ‘Gig Economy’ to Play by Union Rules

Lorena Gonzalez (Rich Pedroncelli / Associated Press)
Rich Pedroncelli / Associated Press

California State Assembly member Lorena Gonzalez (D-San Diego), a former political consultant and labor lawyer, wants the authority to push “gig workers” into collective bargaining and unionization.

California, America’s most unionized state with 2.5 million members, has seen its private sector membership dwindle over the last three decades, to just 1.1 million members.

A substantial reason for non-public sector union irrelevance is the rise of the “gig economy,” a term for corporations embracing the “on demand economy,” “collaborative consumption” and “sharing economy” bandwagons to restructure work into small projects of limited duration.

The ability to hire “contractors” has allowed start-up businesses to avoid having full-time employees, and lets big business justify dumping employees and hiring contractors. The combination has proved deadly for traditional union organizing.

Uber Technologies, for example, has 160,000 workers, but only 2,000–about 1 percent–are full time employees, and the rest are contracted out.

This “1099 society” (named for the income tax forms that contractors file) has also arrived at more traditional companies, such as Microsoft, which now has nearly two-thirds as many contractors as full-time employees. Even small business sole proprietorships have increased their use of contract workers nearly two-fold since 2003, according to TechCrunch.

The U.S. Bureau of Labor Statistics’ latest employer compensation cost figures estimate that the wages and salary of a full-time worker averaged $22.88 per hour in November. But the cost of benefits adds an additional $10.61, or 46 percent, for a total of $31.65 an hour.

By turning employees into “gig” workers, corporations save 30 percent by eliminating the 7.65 percent employer portion of Social Security and Medicare taxes–as well as state unemployment compensation insurance, workers’ compensation insurance, Obamacare burdens, the company’s 401K contributions, and any profit sharing contribution.

Unions have fought hard to drive up all mandatory benefit costs in the private sector to narrow the benefit cost differences between union and non-union workers. In general, the cost to a company for union healthcare coverage is now about 20 percent cheaper than the outrageous cost of Obamacare’s monthly premiums. But by “going gig,” private sector companies have avoided both employee mandatory benefit costs and union organizing risks.

To help counter the trend, Assemblywoman Gonzalez told the Sacramento Business Journal that she will introduce legislation in January because, “As the economy changes, the law has to change as well,” Gonzalez says. “Our rules for unions come out of a different era. We have to accept that.”

By passing the “California 1099 Self-Organizing Act,” the unions hope to create a new organizing tool that reorganizes the definition of temporary workers to allow groups of gig workers to bargain collectively with employers.

The new bill will be limited to workers who depend on a “business platform,” such as Uber’s mobile app, which  acquires customers on the web, rather than finding them through word-of-mouth or classified ads. The estimated number of Californians working this type of 1099 gig has grown to almost 2 million.

Gonzalez and her allies thought about running a statewide ballot initiative. But the initiative campaign would cost millions of dollars, and it is hard to see how gig workers could raise that level of cash. The threat of such an initiative would also motivate employers to spend huge amounts of money to defeat the measure.

The gig organizing legislation will sail through the Democrat-controlled state Assembly and Senate. But Gonzalez has said she is worried that Governor Jerry Brown may side with business and veto the bill.

Despite all the potential turmoil, “This is the start of a conversation. We have to do something with this new paradigm of employment,” according to Gonzalez.


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